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A Fin24 user's body corporate wants the user to pay his levy via a debit order and threaten to charge a penalty fee if he does not. He writes:

My body corporate or home owners' association wants to charge an "admin fee" (more like a penalty fee) if I do not pay my levy by debit order.

Is that allowed? The amount is not a fixed amount every month and I pay on the 1st business day after I receive the statement via electronic banking.

I don't like debit orders and only have two. As far as I'm concerned there are no administration costs for them.

I feel they are trying to control their arrears but in my experience debit orders do not turn bad payers into good payers and payment is not guaranteed because it is via a debit order.

In fact, once it is paid online there is no chance of it being unpaid. My question is, is there a law that states whether they are allowed to charge a fee for not using debit order as a payment method or not? CPA or NCA?

A body corporate or home owners association is not entitled to charge an admin fee in the event of you not paying your levy by debit order, unless it is specifically provided for in the body corporate rules.

On a practical level however, if the body corporate is attempting to reduce admin costs in the body corporate office, for the general benefit of all property owners by way of insisting on debit orders, then naturally all property owners benefit from this, which would make the fee commercially justifiable.

Many body corporates or home owners associations offer a discount to owners that pay their monthly accounts by way of a debit order, but do not penalise those that do not.

*Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.

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